UK skills gap shrinks for the first time in ten years

New figures suggest that the UK’s skills deficit has reached its peak.

The 2025 Talent Shortage Survey by ManpowerGroup revealed that the number of organizations facing skills shortages in this year has dropped from 80% down to 76%.

Michael Stull, the UK managing director of the firm, urged caution in predicting the implications of the findings for the productivity of British businesses and their future, especially given the rising inflation and soaring costs of employers following the latest Budget announcement by the chancellor.

He said: “The significant decline in the UK’s talent shortage could indicate that we are past the peak of the skill gap, which has been intensifying over the last decade since the last drop in 2014.” He said: “The significant drop in the UK talent shortage could mean we’re over the peak of skills gap which has intensified over the past decade since its last drop in 2014.

“While any progress towards closing the skills gaps is positive, it’s important to remember that other indicators indicate a hiring slump. The demand for skills is being slowed by the fact that there are fewer job opportunities.

Stull said that the government and employers should focus on measures to boost UK productivity in order to help businesses get out of their current hiring slump and avoid a possible economic recession.

He said: “Now it’s time to take a smarter approach that doesn’t rely on the improvements made already.”

The UK is now closer to the global average of 74%, which has remained unchanged for this year.

Employers are taking steps to overcome the talent shortage. 28% of respondents cite upskilling or reskilling existing employees. Nearly one-fourth (23%) is growing talent pools, and more than one-fifth (21%) is raising wages. Only 14% of employers are increasing temporary staffing.

The study also revealed that the needs of organisations have changed over the last 10 years. For example, IT and data skills are now in demand at a higher rate than ever before.

The demand for office and customer service workers increased, while the high demand for engineers remained.

Stull said: “While UK macro-economic conditions remain challenging, any improvement in productivity should be seen as a green shoot. We can’t sit back and rest. We must continue to invest and develop, prepare thoroughly for future changes in workplace laws, and adapt recruitment practices, without compromising our longer-term goals.

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